Forex Weekly Outlook July 15-19 – US consumer in focus after Powell’s power punch to the dollar

The USD has suffered in response to Powell’s signal that the Fed will cut rates in July but gradually recovered amid rising inflation. Where next for the dollar? The US consumer is in the spotlight now. Before we learn the central bank’s decision, US retail sales consumer confidence are eyed. Here the highlights for the next week.

Fed Chair Jerome Powell has said that the outlook has dimmed, that many have called for a rate cut, that investment has notably slowed, and that weak inflation may become persistent. His dovish words have opened the door to a rate cut on July 31st and the dollar dropped. However, upbeat core inflation at 2.1% annualized, helped the greenback recover.

1. Chinese GDP: Monday, 2:00. The world’s second-largest economy has been gradually slowing down before the trade wars and worries have intensified since Trump began slapping tariffs. After growing at an annualized pace of 6.4% in the first quarter, a slowdown to 6.2% is on the cards now – in line with the leadership’s goals. China is also due to publish industrial output and other figures that will impact global sentiment.
2. New Zealand inflation: Monday, 22:45. The South-Pacific nation publishes consumer prices only on a quarterly basis and they tend to have a substantial impact. CPI slowed down to only 0.1% in the wake of the new year and acceleration to 0.6% is on the cards now.
3. UK jobs report Tuesday, 8:30. The unemployment rate remains low at 3.8$ in the UK while wages are rising at a satisfactory pace of 3.1%. These data for April are set to be repeated in May. Despite the upbeat numbers, the Bank of England is unlikely to raise rates until Brexit is sorted out. The Claimant Count Change is set to rise by 18.9K in June after 23.2K in May. This rise in jobless claims has yet to impact the jobless rate.
4. US retail sales: Tuesday, 12:30. The US consumer has been active in May as sales increased by 0.5% and core sales by the same scale. May’s report was accompanied by upward revisions for May. This time, more modest increases of 0.2% on the headline and 0.1% in core sales are projected.
5. Fed Chair Powell speaks, Tuesday, 17:00. The world’s most powerful central banker will speak again – this time in Paris. However, his speech is titled “Aspects of Monetary Policy in the Post-Crisis Era” and may not touch directly on recent monetary policy.
6. UK inflation: Wednesday, 8:30. The UK’s Consumer Price Index has been stable at 2% in May – bang on the BOE’s target. The same level is expected now. As mentioned earlier, without a resolution on Brexit, the central bank is unlikely to act.
7. Australian jobs report: Thursday, 1:30. The Australian labor market is doing well but the Reserve Bank of Australia is unhappy with the unemployment rate which stood at 5.2%. A repeat of the same rate is likely while the number of jobs gained may be more modest than the 42.3K reported last time.
8. US consumer sentiment: Friday, 14:00. The University of Michigan’s consumer sentiment gauge has been hovering around high levels in recent months, standing at 98.2 in June. The preliminary figure for July will likely be similar.

*All times are GMT

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Further reading:

• EUR/USD forecast – for everything related to the euro.
• GBP/USD forecast – Pound/dollar analysis
• USD/JPY forecast – the outlook for dollar/yen
• AUD/USD forecast – projections for the Aussie dollar.
• USD/CAD forecast – Canadian dollar predictions

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